The value of the cargo in a container is the most critical variable for logisticians to understand and manage the logistics costs and sea freight charges of the company. If you deliver your good as FOB (Free on Board), you do not need to focus on the issues we will discuss. If you use CIF (Cost Insurance Freight), read what we offer to you. For a better explanation, we refer to the “container shipping costs and cargo value” table given in “The Geography of Transportation Systems”.

Suppose that, $500,000 worth of cargo is loaded in a 40’ container from Port of Loading (POL) Hamburg to Port of Discharge (POD) Los Angeles. The cost of container transportation freight is $5,000. The share of the container transport freight is calculated as follows;

$5,000 freight / 500,000 value of the cargo  x 100 = 1 %

What does this rate tell us?

First of all, we need to know the “type of product” to comment on. Let’s assume the type of product as clothing (mid-range). Then refer to the table given in here It can be observed that this rate is higher than the high value (0.86 %) provided in the table.

After realizing this fact, the task of the logistician is to reduce the cost of freight. How can you do that?

1)    Make negotiation

Negotiation mainly depends on your cargo volume.  If you do not have enough cargo volume for the talks, what would you do? As ShipsGo, we offer you to increase your knowledge & information on this route. Just click the service finder for the details of Hamburg – Los Angeles

Learn also the possibility of shipments from/to the alternative ports. This information could help you to understand the weaknesses and strengths of the liner transport companies on this route. You can reinforce yourself before negotiating.

2)    Look for the better freight

Sometimes, freight forwarders can give better freights than liner transport companies. ShipsGo Forwarder Partnership program accepts very well-known freight forwarders all around the world. These forwarders are listed in the routes regarding their expertise. You have a chance to communicate with them to get a freight quote.

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Demurrage cost is levied to the BCO (Shipper) in cases where they do not take the container out of the port/terminal area for unpacking within the allowed free time. Although the Demurrage fee is designed to discourage the use of terminals for long-term storage, and to improve equipment utilization, it can be a big cost for a BCO. When the free time of the port ends, daily costs range from $75 to $150 starts to charge per container per day; however, charges do increase the longer the cargo stays on the port/terminal. Suppose; you have five days of free time. After that, a charge of $100 per day applies for five days. From 4 to 10 days, the fee rises to $250 and finally to $350 for any day exceeding ten days. If picking up your container was delayed for 14 working days, your cost would be according to the calculations of Shapiro:

14 days – 3 days free time = 11 days of demurrage

($100 x 3 days =$300) + ($250 x 6 days = $1,500) + ($350 x 2 days = $700) = $2,500 per container

You have to pay these fees in advance to recover your cargo. If you have five containers in that shipment, your cost would be $2,500 x 5 containers or $12,500!

SOLUTION:

ShipsGo “release alert” and “gate out notification” are innovative services that our customers benefit and to reduce their demurrage costs. ShipsGo users get a message if their container is not released from the port within free time days. In addition to that, they receive “Gate Out” notification of their discharged containers.

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